Qualcomm ( QCOM) plans to pay Broadcom ( BRCM) $891 million over four years to settle litigation between the two companies worldwide. Qualcomm said late Sunday it would pay $200 million in the quarter ending June 30. The agreement results in the dismissal with prejudice of all litigation between the companies, including all patent infringement claims, as well as the withdrawal by Broadcom of its complaints to the European Commission and the Korea Fair Trade Commission. Qualcomm said the terms of the agreement won't change its licensing revenue models for its 3G and 4Q technologies. Under the agreement, the companies have granted certain patent rights to each other. However, neither company's customers receive rights to patents related to chip products incorporated into non-cellphone products and equipment. "The settlement will allow us to direct our full attention and resources to continuing to innovate, improving our competitive position in this economic downturn, and growing demand for wireless products and services," said Paul Jacobs, chairman and CEO of Qualcomm, in a statement. Qualcomm had delayed its quarterly earnings report last week in order to complete settlement talks with Broadcom. The company will post the quarter's results Monday. The settlement ends years of litigation between the companies, in which Broadcom had sued Qualcomm alleging its rival was misusing its patents to suppress industry competition. The company had argued that it only needed to identify the types of products at issue -- chips used in wireless communications and handsets -- to get a court order declaring the patents unenforceable.
Broadcom also had claimed the threat of patent litigation made customers reluctant to buy its chips. In May 2007 the company won $19.6 million in damages, after a jury found Qualcomm had violated three of its chip patents. But Qualcomm had also scored some legal victories, having three consumer class-action suits against the company alleging antitrust violations thrown. The chipmaker had been accused of failing to license its technology on fair terms.